Low Ukraine corn offers signal import opportunity for China

As Ukraine and Russia signed a landmark agreement to exempt grain flows from the ongoing war disruptions, buyers are gradually refocusing their buying strategy to the Black Sea region.

Latest indications showed that premiums for nearby shipments from Odesa to China were quoted at $200/ton over August CBOT corn futures, according to brokers. The price is $60/ton cheaper than current Brazilian corn crops and is $40/ton lower than Argentinian corn crops.

With nearby CBOT corn futures at $5.94/bu, the CFR import price for Ukrainian corn into China would mount to $433/ton, which is cheaper than the current domestic corn prices at 3,100-3,300 yuan/ton ($459-489/ton).

The indicative margins for Chinese buyers importing corn from Ukraine are about $30-55/ton.

However, the geopolitical uncertainty is still significant as Russia shelled Ukrainian military infrastructure near grain export facilities in Odesa shortly after the two countries signed an agreement to ensure grain shipments out of the Black Sea.

Recent reports revealed that underwater mines need to be removed before grain shipments from the Black Sea region can ramp up, and that could take weeks if not months.

Corn futures in China ticked nearly 2% higher across the curve due to technical trading as short sellers closed their positions for two straight days.